Following a change in the eligibility guidelines for the EV tax credit, all versions of the Tesla Model Y and Ford Mustang Mach-E now qualify for the $7,500 rebate. Plenty of controversies have surrounded the federal tax credit, which, thanks to last year's Inflation Reduction Act, has received a significant overhaul. While it enabled electric and plug-in hybrid models from Tesla, Toyota, and General Motors to regain their eligibility, the new battery sourcing and vehicle assembly requirements currently prevent EVs from Volvo, Hyundai, and a few others from qualifying for the incentive.
The IRS has updated its list of qualifying vehicles, upgrading all variants of the Model Y and Mach-E to a sales cap of $80,000. Before this, Model Y units with five seats had a $55,000 sales cap, while those with a seven-seat configuration had an $80,000 sales cap. The Mach-E also maxed out at $55,000. Now, all trims have a sales cap of $80,000, which means buyers can opt for the high-end variants and still benefit from the government-sponsored incentive. It should be noted that this credit is available until March. The U.S. Department of Treasury is expected to release additional regulations which may affect the eligibility of various models.
Tesla And Ford May See Increased Demand
Tesla already set the ball rolling earlier this year when it lowered the MSRP for all four models. Not only did this mean more consumers could now afford a Tesla EV, but it mounted additional pressure on other automakers and the used EV market. Although GM and Volkswagen have said they won't reduce the asking price for their EVs, Ford cut the Mach-E’s cost by up to $5,900 in what seems to be an attempt to match Tesla. While the level of the price cuts aren't the same, it does make the Mach-E more affordable.
With all variants of the Model Y and Mach-E now eligible for a tax credit coupled with the recent MSRP adjustments, this creates an opportunity for both automakers to make a killing over the next month. The Model Y currently starts at $54,990, which means future buyers can get optional add-ons like Full Self-Driving ($15,000), a Wall Connector ($425), and a seven-seater layout ($4,000), and still qualify for the tax credit. The same applies to the Mach-E, which, while starting at $45,995, will receive the tax credit even after including an e-AWD standard battery ($3,000), full activation of Ford’s Blue Cruise Feature 1.2 ($1,900), and more.
The IRS's decision represents yet another effort to encourage EV sales in the country. As mentioned, those interested in acquiring a Model Y or Mach-E and getting a guaranteed tax credit of up to $7,500 will have until next month to place an order, since their eligibility could be affected later. Other eligible EVs from both automakers include the Tesla Model 3 (up to $55,000) and the Ford F-150 Lightning (up to $80,000).
Source: IRS